Key Features of the Prudential Premier Stakeholder Pension Plan

Transcription

1 Key Features of the Prudential Premier Stakeholder Pension Plan Important information you need to read

2 The Financial Conduct Authority is a financial services regulator. Prudential is required to give you this information to help you to decide whether our Premier Stakeholder Pension Plan is right for you. You should read this document carefully so that you understand what you are buying, and then keep it safe for future reference. Please read this alongside your illustration and Fund Guide. Braille, large print or audio versions of this booklet are available. 2 Key Features of the Prudential Premier Stakeholder Pension Plan

3 Welcome This booklet is for the Key Features of our Prudential Premier Stakeholder Pension Plan. If you are thinking about whether our Prudential Premier Stakeholder Pension Plan may be right for you, this booklet will help you make that decision. Please read it and keep it in a safe place. If you still have questions about our Prudential Premier Stakeholder Pension Plan after reading this booklet, please call us on If you have a financial adviser, please contact them in the first instance. Its Aims To build up a fund, in a tax-efficient way, to provide you with a regular income when you take your benefits. If you choose waiver benefit, to make your pension payments for you if you are off work for a long time due to illness or injury. Your commitment To make regular monthly or yearly payments. Or to make at least one single payment at the start of the plan. To allow your pension fund grow until you start taking your benefits. To regularly review your payments if you want your pension to meet your income requirements when you take your benefits. If you have purchased waiver benefit, you must tell us of any change in your health from the time you sign the application form through to the start of your plan, as this could affect your cover. Key Features of the Prudential Premier Stakeholder Pension Plan 3

4 Risks What you might get back is not guaranteed and will depend on many factors such as our investment performance and the options you choose when you take your benefits. If you cancel your plan within 30 days of receiving your cancellation notice, you may get less than you paid in if the value of your fund has fallen. For further details please see Can I change my mind?. When you are ready to take your benefits they may be lower than illustrated because: investment growth may be lower than illustrated annuity rates when you take your benefits may be lower than illustrated the cost of buying your benefits may be higher you may start taking your benefits earlier than your selected retirement date our charges may be higher than illustrated tax rules may change in the future without notice you may stop paying into your plan or take a payment break you may transfer your plan to another company Your plan may invest in a range of investment types, including stocks and shares, which carry differing levels of risk. The government provides a benefit known as Pension Credit. If you have little or no other retirement provision, the pension you receive from this plan could reduce the benefit you receive from Pension Credit. The exact effect will depend on the rules in place when you take your benefits. For further information about Pension Credit please see your financial adviser. If you stop your payments, you may not meet any target benefits within your illustration and you will lose any waiver benefits. For further details please see What other benefits can I choose?. If you have purchased waiver benefit, we will not pay out if you have failed to disclose any information or if a claim arises from a cause not covered by the plan. The value of an investment may go down as well as up and the fund value at retirement may be less than the payments you have made. Inflation will reduce what you can buy in the future. Some of our funds invest in property and land. This can be difficult to sell so you may not be able to sell/cash in this investment when you want to. We may have to delay acting on your instructions to sell your investment. You should look upon your investment in such funds as being long term. There are large costs when we buy and sell property. The allowance for these costs amongst other factors can lead to short-term falls in the price of units in such funds. The value of property and land is generally a matter of a valuer s opinion rather than fact. Under certain circumstances, in the interest of other investors, we reserve the right to defer any early encashment or switch between funds this may be for a period of up to 6 months for unit-linked funds that mainly invest in property and land, and up to 1 month for all other funds. This is in exceptional circumstances and if this applies to you, we will let you know. If the total charges taken from your plan are more than any overall growth achieved, your plan will fall in value, possibly to even less than you have invested. 4 Key Features of the Prudential Premier Stakeholder Pension Plan

5 Q&As What is the Prudential Premier Stakeholder Pension Plan? It is a tax-efficient way to save for retirement. It meets the minimum standards set by the government on payment levels, costs, and terms and conditions. How flexible is it? You can change your payments at any time, subject to minimum amounts that we may set from time to time. You and your employer, if any, can make regular payments or one-off lump sum payments into the plan. You can stop paying or take a payment break and restart later if your circumstances change. Please note that this will reduce your future benefits and may have an impact on your waiver benefits. You can arrange for your payments to be automatically increased each year. What might I get when I take my benefits? You can use your pension fund to create an income. The size of your pension fund, to generate this income will depend upon a many factors such as: the amount that has been paid into the plan how long you have been making payments the performance of the fund(s) you have invested in the age you choose to take your benefits the amount of charges you ve paid. The size of your income will depend upon many factors including how you draw your pension. When can I take my benefits? The Government currently allows people to start taking their benefit from the age of 55, even if you are still working. You may be able to start taking your benefits early if you re in ill health. The minimum age from which you can access your personal or occupational pension will increase from 55 to 57 in 2028 and is expected to remain at 10 years below the State Pension Age. The State Pension Age will gradually increase from age 66 to age 67 for males and females between 6 April 2026 and 5 April These ages will be linked to life expectancy and other factors in future and therefore will change. You should consider this change as you plan your retirement. A State Pension Age calculator on the Government s website will enable you to check your expected State Pension Age: To find out how much your State pension might be, you might find the Government s calculator useful. Under the terms of this contract you are currently required to take your benefits by age 75. What choices will I have when I take my benefits? From the 6th April 2015 regulations allowed added flexibility in how you draw your pension savings. There are four main options which may be used in combination: Take a single or series of cash lump sums from your pension savings Uncrystallised Funds Pension Lump Sum. Flexi-access drawdown a new form of drawdown which will allow you to take an unlimited amount of income or lump sums from your designated defined pension fund. This will replace flexible and capped drawdown, although existing capped drawdown plans will continue. A pension annuity an investment that guarantees to pay a secure income for the rest of your life, regardless of how long you live. Pension directly from a pension scheme occupational pensions schemes are not changing. You will still be able to draw a pension from any occupational pension scheme you are a member of. Please contact us as you approach retirement and we will let you know which of these options we may be able to offer you. Key Features of the Prudential Premier Stakeholder Pension Plan 5

6 Whatever you decide to do with your pension pot you don t have to stay with us. You should shop around and depending on the choices you make, you may find something more appropriate elsewhere, with alternative features, investment options or charges. How much can be paid into my plan each year? There is no limit on the amount you can contribute annually to your pension plan. However, there will be a tax charge on contributions made by you or on your behalf that exceed an annual allowance set by the government. You can arrange for your payments to be collected from your bank or you can ask your employer to deduct the payments from payroll and pay them directly to Prudential. Can I have more than one pension scheme? There is no limit on the number of pension schemes you can join. We recommend that you seek financial advice before joining multiple schemes. What are the tax advantages of investing in a Prudential Premier Stakeholder Pension Plan? Tax Relief You ll normally receive tax relief on your contributions. For every 100 you pay into your plan, HM Revenue & Customs (HMRC) will pay in another 25. You ll get this tax relief up to the higher of 3,600 gross (including tax relief) or 100% of your earnings. If you earn above the basic rate you will be able to claim back the extra tax you pay through your tax return. Annual Allowance The Government limits the amount that can be paid each year, to all your pensions, before incurring a tax charge. This is called the Annual Allowance. If this is exceeded, you may be liable to a tax charge and must inform HMRC through the completion of a tax return. You may be able to carry forward unused allowance from the last three years to increase your limit for the current year. Your Annual Allowance includes all contributions from you, your employer, any third party and increases in the value of any salary related pension benefits you may have. Most people won t have pension savings worth more than the lifetime allowance. If your pension savings are worth more than this when you take your benefits, you ll have to pay the lifetime allowance tax charge on the excess unless you have some form of lifetime allowance protection. Tax is a complicated subject and you may wish to seek advice if you feel this will affect you. For more information please visit or visit the HMRC website at Money Purchase Annual Allowance The Money Purchase Annual Allowance (MPAA) may apply to you if you have flexibly accessed pension benefits on, or after 6th April Your pension scheme or provider will have informed you if you have flexibly accessed your pension benefits. Examples or drawing benefits flexibly include taking income from flexiaccess drawdown or a cash lump sum (Uncrystallised Funds Pensions Lump Sum). For more information visit Lifetime Allowance There is no limit on how big your pension fund can grow to, however you will have a lifetime allowance in relation to the maximum amount of tax-relieved benefits you can build up over your lifetime. If you think you are affected by this limit you can get more information visit or the HMRC website at Tax rules require careful consideration and you should speak to a financial adviser. Capital Gains Tax You don t pay capital gains tax on your pension funds. Income Tax Any pension income will be taxed as earned income. This information is based on our understanding of current taxation, legislation and HM Revenue & Customs practice. These tax rules could change in the future without notice. The impact of taxation and any tax relief depends on your individual circumstances. For more information about tax, please go to HMRC s website: 6 Key Features of the Prudential Premier Stakeholder Pension Plan

7 Scottish Rate of Income Tax The Scotland Act 2012 gives the Scottish Government the power to set a Scottish rate of income tax. Individuals identified by HMRC as Scottish rate taxpayers may pay a different rate of income tax to the rest of the UK. This would affect the amount of tax relief received on pension contributions. The Government has introduced a period of two years from the 6th April 2016 during which pension providers will continue to claim tax relief at the UK rate for all members. HMRC will identify Scottish taxpayers and make any adjustment (depending on the Scottish rate) directly with the member. This will be done either through the Self-Assessment process or PAYE Coding Notice. For more information on the Scottish Rate of Income Tax, please speak to your scheme administrator, your financial adviser, or please go to HMRC s website: Where are the payments invested? We will invest all your payments to your plan in up to six funds from a wide range of investment options available to you. Options include unit-linked Prudential funds and funds from managers outside the Prudential group. You can switch your money between funds at any time. We currently don t charge you for this. If this changes in the future we will let you know. The investment strategy can be altered by switching existing investments into different funds, or by allocating new payments to another fund(s). However, different fund management charges will apply to your new choices of investment fund in some instances. Lifestyle switching is also available. This investment option aims to provide long-term growth with automatic switching into funds with lower risk profiles as retirement approaches. Payments into unit-linked funds will buy units in the funds you choose. The price of each unit depends on the value of the investments in the fund and also whether more money is going into or out of the fund. We work out the value of your plan based on the total number of units you have in each fund. If the unit prices rise or fall, so will your plan value. Money in the various funds may be invested in a wide range of shares and other investments in the UK and abroad. Please refer to your Fund Guide for further information. If no fund selection is made, the plan will invest in the default fund, the Prudential Managed Pension Fund, with Cautious Strategy Lifetime Investment Option. If your employer is using your plan for automatic enrolment or qualification purposes, it must have a default arrangement. This arrangement is appropriate for the workforce and has been chosen by your employer. Money will be invested in this arrangement if no active investment choice is made. This default arrangement does not represent a recommendation on behalf of Prudential. Your financial adviser will help you select which investments are most suited to you. What are the charges? We deduct an annual management charge that covers the costs of setting up your plan, managing the investments and paying commission. This charge is taken as a percentage of the fund value and this varies according to the funds chosen, currently up to a maximum of 1% a year. For example, if your fund is valued at 500 throughout the year, this means that we will deduct up to 5 that year. If your fund is valued at 7,500 throughout the year, we will deduct up to 75 that year. Our charges may vary in the future and may be higher than they are now. Further details on the charges can be found in the enclosed illustration. For further information of the charges please see your Fund Guide. The charges per year shown are calculated as a percentage of the value of your investment in the fund. These are the charges we take for administering your plan and investments. If your employer is using your plan for automatic enrolment or qualification purposes, there is currently a charge cap equivalent to 0.75% per year, excluding transaction costs, on the value of money held in the default arrangement. In addition to our Product Charges, there may be some additional costs which may impact the overall performance of the fund. These costs include trading, dealing costs and property expenses. More information about these may be found in the Fund Guide. Key Features of the Prudential Premier Stakeholder Pension Plan 7

8 What other benefits can I choose? If you re making regular payments you may be able to buy waiver benefit depending on eligibility. Waiver benefit will maintain the regular payments into your pension fund until your selected retirement date if you are off work due to illness or injury. If your claim for waiver benefit is valid, we will cover your payments after an initial waiting period chosen by you at the start of the plan. Waiver benefit cannot be added to your plan after you have joined. Please note, you will not be eligible for waiver benefit if you joined the Prudential Premier Stakeholder Pension Plan for the first time on or after 17 January This benefit will stop if you stop making payments to the plan. Please ask your financial adviser for further details on waiver benefit. What happens if I move abroad? Please note Prudential is not able to accept new monies from customers living overseas. If you move abroad and are no longer a resident of the UK this will have an impact on your ability to contribute to this product. What happens if I die before I take my benefits? We will pay the value of your fund as a lump sum. As trustees, Prudential will decide who should receive the lump sum. We take into account your circumstances when you die and anyone you ve previously nominated to receive any lump sum. Benefits payable on death are not subject to income tax, but if they form part of your estate they may be subject to inheritance tax. If the value of all death benefits paid as a lump sum from this and any other scheme are more than the Lifetime Allowance, there will normally be a tax charge. Can I transfer my plan? You may hold pension pots in different categories, such as money purchase and defined benefit pensions. Under new rules you are able to transfer different categories of pension savings separately and to different places, for example, keep a defined benefit pension where it is, but transfer any money purchase pension. You can transfer out your pension to another registered pension scheme or qualifying recognised overseas scheme before age 75 as long you have stopped paying contributions and haven t previously used any of your pension to buy an annuity or pension from your scheme. If you transfer a pension pot within a category, you can still accumulate money within the category once the transfer has taken place. There may be additional circumstances where you can transfer your pension savings. Please speak to your employer/scheme trustees for more information. To find more information on this subject, you may also speak to a financial adviser or visit The Pension Advisory service website at Can I change my mind? You can change your mind within 30 days from when you get your plan documents. If you decide, for any reason, within this period, that you don t want the plan, we ll give you your money back. However, if you start the plan with a single payment and cancel within 30 days, you may get back less than you paid in if the value has fallen. If you do not exercise your right to cancel within the 30-day statutory cancellation period, the contract will become binding. We will not return any money to you except in the form of a benefit payable in accordance with the rules. If you wish to exercise your right to cancel, you should complete and return the Cancellation Notice you will receive or write to us at: Customer Service Centre Prudential Lancing BN15 8GB Your right to cancel is 30 days. How will I know how my plan is doing? We ll send you a yearly statement to show how your plan is doing. You can get an up-to-date valuation from our Customer Services Department, by phoning or writing to us at the address given in the previous question. 8 Key Features of the Prudential Premier Stakeholder Pension Plan

9 Other information How to contact us If you have a financial adviser, please continue to use them as your first point of contact. If you don t have a financial adviser, you can call our Customer Service Centre on The opening hours are 8am to 6pm, Monday to Friday. Calls may be monitored or recorded for quality and security purposes. You can also contact us by: Post: Prudential Customer Service Centre Lancing BN15 8GB Or via our website: Guidance Guarantee In addition to the advice your Financial Adviser can provide, we recommend you use Pension Wise, a new service from the Government that will offer free and impartial guidance. This service will be available on the internet, over the telephone, or face to face. Find out how to access this by visiting How to make a complaint If your complaint is advice related please contact your financial adviser. If we do anything that you re unhappy about, we ll always try to put it right if we can. To do this we need to know exactly what the problem is. So please write to us with all the details of what has happened. Please send your complaint to: Prudential Customer Relations Unit Lancing BN15 8GB Copies of our complaint handling procedures are available from this address. If you d rather phone, you can call us on To make sure we have an accurate record of what you tell us, we may monitor or record your call. We hope that we ll be able to handle your complaint in a way that satisfies you. But if we can t, you can speak to one of the following organisations: The Financial Ombudsman Service Exchange Tower Harbour Exchange Square London E14 9SR Telephone: The Pensions Ombudsman 11 Belgrave Road London SW1V 1RB Telephone: The Pensions Advisory Service (TPAS) 11 Belgrave Road London SW1V 1RB Telephone: The Pensions Advisory Service is an independent, government funded body that gives free advice to members of the public about pensions. These are free services. Using them won t affect your right to take legal action. We can help you find the appropriate organisation to handle your complaint. Terms and Conditions This Key Features document gives only a summary of the Prudential Premier Stakeholder Pension Plan and should be read with your illustration. If you would like a copy of the full terms and conditions, please contact us. Key Features of the Prudential Premier Stakeholder Pension Plan 9

10 Divorce and dissolution of a civil partnership legislation In line with government legislation pension funds and pension annuities are classed as assets and may be taken into account in a divorce settlement or dissolution of a civil partnership. If you get divorced or there is a dissolution of a civil partnership and a pension credit is awarded against your benefits, they will be reduced. If this happens we will write to you. How we will communicate with you We will communicate with you in English in writing, by phone or . Law The law and courts of Scotland will decide any dispute. Your Client Category The Financial Conduct Authority (FCA) is a financial services regulator. It asks companies to categorise their clients based on their involvement in and familiarity with financial services. This helps to make sure we send the right information to the right people. For example, information for an individual customer should assume less knowledge than information for a financial services company. You re categorised as a retail client. This means you get the highest level of protection by getting the clearest explanation of what you re buying and more detail about the risks. This means the information we send you is clear, balanced and indicates any relevant risks. Your category does not affect your right to lodge a complaint with the Financial Ombudsman Service. If you have any questions about your client category, or think your category should be different, please call our Customer Service Team on Conflict of Interest We want to make sure that we uphold our reputation for conducting business with integrity. That s why we have drawn up a policy to deal with any conflicts of interest. If you would like to know the full details of our Conflict of Interest Policy, please contact our Customer Service Team on Compensation We are covered by the Financial Services Compensation Scheme (FSCS). You may be entitled to compensation from the Scheme if we cannot meet our obligations. This depends on your eligibility, the type of business, the fund/s invested in or the funds selected and the circumstances of the claim. For more information on the FSCS and examples of limits in the scope of FSCS for your plan, please go to the webpage for more details. For further information contact: The Financial Services Compensation Scheme 10th Floor Beaufort House London EC3A 7QU Telephone: or Prudential policyholders are not protected by the FSCS against the insolvency of other companies within the Prudential group or an external company. This means that the FSCS does not provide protection: (i) for Prudential unit-linked funds which are invested solely in funds operated by another company within the Prudential group (for example, unit trusts or Open Ended Investment Companies operated by another company within the Prudential group); or (ii) for externally-linked funds. However, it should be noted that the money policyholders invest in a fund is kept separate from the assets of the actual company that manages the fund. This is often known as ring fencing of assets. The liabilities of these funds are normally limited to the assets owned by the fund, so the likelihood of insolvency is very low. Unit prices may fluctuate in line with the value of the assets owned by the fund, but this is normal investment risk. If another company from within the Prudential group or an external company becomes insolvent and we cannot recover the full value of the units, Prudential will not be liable for the shortfall. 10 Key Features of the Prudential Premier Stakeholder Pension Plan

11 Prudential s liability Our liability under any fund that we make available under the Premier Stakeholder Pension Plan cannot exceed the value of the assets underpinning that fund, whether these assets are actual assets, an interest in another fund (whether managed by a company within the Prudential group or by an external company) or an interest in a reinsurance policy effected by us to reinsure our liability under a fund. In particular, for the type of funds listed in one and two above, our liability is limited to the amount we can claim from the relevant company. So, for example, if the external company or the other company within the Prudential group, were to become insolvent, we could only pay the amount, if any, which we could collect under the insolvency in respect of the units allocated to the plan. In addition, we are not liable for any losses caused by the acts and omissions of an external company in respect of its own fund and/ or the externally-linked fund. FCA Registration Prudential Assurance Company Limited is entered on the Financial Conduct Authority (FCA) Register, Firm Reference Number The FCA Register is a public record of all the organisations that the FCA regulates. You can contact the FCA at: The Financial Conduct Authority 25 North Colonnade Canary Wharf London E14 5HS Telephone: or Prudential Regulation Authority contact details: The Prudential Regulation Authority Bank of England Threadneedle St London EC2R 8AH Telephone: enquiries@bankofengland.co.uk Thank you for taking the time to read this document. We d love to know what you think of it. Was it easy to understand? Could we make it better? Please take a few minutes to let us know at Key Features of the Prudential Premier Stakeholder Pension Plan 11

12 Prudential is a trading name of The Prudential Assurance Company Limited, which is registered in England and Wales. This name is also used by other companies within the Prudential Group. Registered office at Laurence Pountney Hill, London EC4R 0HH. Registered number Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. P564 11/2016